19% of families owe college debt

Nineteen percent of households owed student loan debt in 2010, more than double the share two decades earlier, according to a Pew Research Center analysis of government data. Forty percent of households headed by someone younger than age 35 owe such debt, also a record high. The average debtor family owes $26,682 in unpaid college loans, up from $23,349 in 2007.

The U.S. Education Department has released two-year and three-year default rates for student loans that came due in 2009 and 2010. In two years, 9.1 percent defaulted, double the rate six years ago. Defaults rose to 13.4 percent in three years.

The default rates don’t include borrowers who’ve deferred payment because of hardship, such as unemployment, notes the Wall Street Journal.  ”Over the long haul, the government projects that nearly 1 in 5 borrowers will default on federal student loans.”

Borrowers can link repayments to their discretionary income; the balance will be forgiven after 20 years. But college debt is still a burden: Debtors are likely to postpone buying a new car, much less buying a home.

Glenn Reynolds has more in The Higher Education Bubble.

Subprime college

“Many parents and the children they send to college are paying rapidly rising prices for something of declining quality, ” writes George Will in Subprime college educations.

Quoting Glenn Reynolds” new book, The Higher Education Bubble, Will writes that colleges has become a “status marker” for many people, “signaling membership in the educated caste, and a place to meet spouses of similar status.”

Since 1961, the time students spend reading, writing and otherwise studying has fallen from 24 hours a week to about 15 — enough for a degree often desired only as an expensive signifier of rudimentary qualities (e.g., the ability to follow instructions). Employers value this signifier as an alternative to aptitude tests when evaluating potential employees because such tests can provoke lawsuits by having a “disparate impact” on this or that racial or ethnic group.

Just as the government pumped money into mortgages, it’s pumped money into student loans ”with the predictable result that housing prices/college tuitions soared and many borrowers went bust.”

Tuitions and fees have risen more than 440 percent in 30 years as schools happily raised prices — and lowered standards — to siphon up federal money.

Twenty-nine percent of borrowers never graduate, and many who do graduate take decades to repay their loans.

A Forbes writer’s smart, nonconformist son skipped college: At 27, he’s earning as much as friends with a college degree, owns his home and has started a retirement fund.  Of course, your mileage may vary.